Thursday, April 25, 2013

Trickle-up economics and a new health care model

It's been a month since I started my new practice. We are up to nearly 150 patients now, and aside from the cost to renovate my building, our revenue has already surpassed our spending. The reason this is possible is that a cash-pay practice in which 100% of income is paid up front has an incredibly low overhead. My admitted ineptitude at financial complexity has forced me to simplify our finances as much as possible. This means that the accounting is "so simple even a doctor can do it," which means I don't need any front-office support staff. I don't send out bills because nobody owes me anything. It's just me and my nurse, focusing our energy on jury-rigging a computerized record so we can give good care.

Our attention to care has not gone unnoticed. Yesterday I got a call from a local TV news reporter who wanted to do a story on what I am doing. Apparently she heard rumor "from someone who was in the hospital." I was the talk of the newsroom, yet I've hardly done any marketing; in fact, I am trying to limit the rate of our growth so I can focus on building a system that won't collapse under a higher patient volume. I explained this to the disappointed reporter why I was not interested in the interview by telling her that I left my old practice because I needed to get off of the hamster wheel of health care; the last thing I want to do now is to build my own hamster wheel.

I've also gotten interest from a place I didn't expect: local specialists. I always thought what I am doing applies only to primary care, as it is hard to do a monthly fee for the procedure-oriented specialties. But as the enthusiasm for my new type of practice grows in the community, it may spur a boom in cash-paying patients.

Why? One of the provisions in the Accountable Care Act (ACA) is that small businesses (with over 50 employees) who want to avoid the penalty for not having insurance can opt to contract with a direct-care physician like myself in conjunction with a high-deductible health care plan. Even though I have made no effort to attract such interest, I've already been approached by two businesses of 100 employees to make such an arrangement. Again, I turned the offer down for now, saying I am quite interested, but would only do so when my practice was ready. But the fact that this happened while I am doing my best to avoid attracting such attention suggests to me that the desire for this is very intense in the small business community. This makes sense, as they don't want to pay the fines, but also don't want to pay the exorbitant cost of standard insurance, and so would jump at any other option.

The end result is a potentially large influx of patients who are basically self-pay. The specialists, who see me lowering my overhead significantly by taking cash payment up-front, see the same opportunity for their practices. The hitch for them is that they are not allowed to give discounts to self-pay patients that they are not also giving to Medicare patients.

Yes, it is illegal for a Medicare provider to give a discount to non-Medicare patients who cannot afford the cost. There are ways around this rule, and I hope to work out something for my specialist colleagues so they can give significant discounts in exchange for cash up front (which is, by the way, the same logic that the labs use to give the enormous discounts I am offering to my patients on lab services). I have had multiple specialists show very high interest in such an arrangement. I'll fill you in as this develops.

This seems quite ironic to me, a sort of "trickle-up economics," where I am spreading the benefit of offering discounted care in exchange for cash to the higher-paid specialists. It is a win-win-win arrangement, though, as the specialists benefit from reducing their overhead while getting guaranteed payment, I benefit by increasing the value of my type of practice even more to my patients, and the patient benefits by getting cheaper care. This, of course, raises the likelihood that more businesses will opt for this payment model, and the movement gains momentum.

Who loses? The "increased overhead" comes in the form of the front-office staff doing billing, coding, and collections. This is the staff my simple-minded approach to finances has heretofore avoided, and hopes to continue avoiding.

I may be completely wrong in this, as it may not consider other factors (which wouldn't surprise me), but I am not wrong about the intense interest I see in what I am doing. It is palpable. When I spoke at HIMSS over the weekend (ironically as keynote for a pre-conference targeted at large health systems building ACOs), the reception was remarkably positive. My message of simplicity is falling, apparently, on very fertile soil. Did they realize the implication of "cost savings" is the need for less employees and the result to downsize their business? I took great pains to emphasize the point, yet the reception was vigorously positive.

I suppose little should surprise me, in a world where the have-lesses could have their abundance trickle up to the have-mores. Who knows, maybe people will even pay attention to the economic wisdom of a doctor with an accounting impediment.

Nah. That's ridiculous.

After taking a year-long hiatus from blogging, Rob Lamberts, MD, ACP Member, returned with "volume 2" of his personal musings about medicine, life, armadillos and Sasquatch at More Musings (of a Distractible Kind), where this post originally appeared.

Blog log

Members of the American College of
Physicians contribute posts from their own sites to
ACP Internistand ACP
Hospitalist. Contributors include:

Albert Fuchs,
MD
Albert Fuchs, MD, FACP, graduated from the
University of California, Los Angeles School of Medicine, where he
also did his internal medicine training. Certified by the American
Board of Internal Medicine, Dr. Fuchs spent three years as a
full-time faculty member at UCLA School of Medicine before opening
his private practice in Beverly Hills in 2000.

And Thus, It Begins
Amanda Xi, ACP Medical
Student Member, is a first-year medical student at the OUWB School
of Medicine, charter class of 2015, in Rochester, Mich., from which
she which chronicles her journey through medical training from day
1 of medical school.

Auscultation Ira S. Nash,
MD, FACP, is the senior vice president and executive director of the North Shore-LIJ
Medical Group, and a professor of Cardiology and Population Health at Hofstra North
Shore-LIJ School of Medicine. He is Board Certified in Internal Medicine and
Cardiovascular Diseases and was in the private practice of cardiology before joining the
full-time faculty of Massachusetts General Hospital.

Zackary Berger
Zackary Berger, MD, ACP Member, is a primary care doctor and
general internist in the Division of General Internal Medicine at
Johns Hopkins. His research interests include doctor-patient
communication, bioethics, and systematic reviews.

Controversies in Hospital
Infection Prevention
Run by three ACP
Fellows, this blog ponders vexing issues in infection prevention
and control, inside and outside the hospital. Daniel J Diekema, MD,
FACP, practices infectious diseases, clinical microbiology, and
hospital epidemiology in Iowa City, Iowa, splitting time between
seeing patients with infectious diseases, diagnosing infections in
the microbiology laboratory, and trying to prevent infections in
the hospital. Michael B. Edmond, MD, FACP, is a hospital
epidemiologist in Richmond, Va., with a focus on understanding why
infections occur in the hospital and ways to prevent these
infections, and sees patients in the inpatient and outpatient
settings. Eli N. Perencevich, MD, ACP Member, is an infectious
disease physician and epidemiologist in Iowa City, Iowa, who
studies methods to halt the spread of resistant bacteria in our
hospitals (including novel ways to get everyone to wash their
hands).

Suneel Dhand, MD, ACP Member Suneel Dhand, MD,
ACP Member, is a practicing physician in Massachusetts. He has published numerous
articles in clinical medicine, covering a wide range of specialty areas including;
pulmonology, cardiology, endocrinology, hematology, and infectious disease. He has also
authored chapters in the prestigious "5-Minute Clinical Consult" medical textbook. His
other clinical interests include quality improvement, hospital safety, hospital
utilization, and the use of technology in health care.

Dr. Mintz' Blog
Matthew Mintz, MD, FACP, has practiced internal medicine for more
than a decade and is an Associate Professor of Medicine at an
academic medical center on the East Coast. His time is split
between teaching medical students and residents, and caring for
patients.

FutureDocs
Vineet Arora, MD, FACP, is Associate Program Director for the
Internal Medicine Residency and Assistant Dean of Scholarship &
Discovery at the Pritzker School of Medicine for the University of
Chicago. Her education and research focus is on resident duty
hours, patient handoffs, medical professionalism, and quality of
hospital care. She is also an academic hospitalist.

Glass Hospital
John H. Schumann, MD, FACP, provides transparency on the workings
of medical practice and the complexities of hospital care,
illuminates the emotional and cognitive aspects of caregiving and
decision-making from the perspective of an active primary care
physician, and offers behind-the-scenes portraits of hospital
sanctums and the people who inhabit them.

Gut Check
Ryan Madanick, MD, ACP Member, is a gastroenterologist at the
University of North Carolina School of Medicine, and the Program
Director for the GI & Hepatology Fellowship Program. He
specializes in diseases of the esophagus, with a strong interest in
the diagnosis and treatment of patients who have
difficult-to-manage esophageal problems such as refractory GERD,
heartburn, and chest pain.

David Katz, MD
David L. Katz, MD, MPH, FACP, is an internationally renowned
authority on nutrition, weight management, and the prevention of
chronic disease, and an internationally recognized leader in
integrative medicine and patient-centered care.

Just Oncology
Richard Just, MD, ACP Member, has 36 years in clinical practice of
hematology and medical oncology. His blog is a joint publication
with Gregg Masters, MPH.

Medical Lessons
Elaine Schattner, MD, FACP, shares her ideas on education, ethics
in medicine, health care news and culture. Her views on medicine
are informed by her past experiences in caring for patients, as a
researcher in cancer immunology, and as a patient who's had breast
cancer.

Mired in MedEd
Alexander M.
Djuricich, MD, FACP, is the Associate Dean for Continuing Medical
Education (CME), and a Program Director in Medicine-Pediatrics at
the Indiana University School of Medicine in Indianapolis, where he
blogs about medical education.

More Musings
Rob Lamberts, MD, ACP Member, a med-peds and general practice
internist, returns with "volume 2" of his personal musings about
medicine, life, armadillos and Sasquatch at More Musings (of a
Distractible Kind).

Prescriptions
David M. Sack, MD, FACP, practices general gastroenterology at a
small community hospital in Connecticut. His blog is a series of
musings on medicine, medical care, the health care system and
medical ethics, in no particular order.

The Blog of Paul Sufka
Paul Sufka,
MD, ACP Member, is a board certified rheumatologist in St. Paul,
Minn. He was a chief resident in internal medicine with the
University of Minnesota and then completed his fellowship training
in rheumatology in June 2011 at the University of Minnesota
Department of Rheumatology. His interests include the use of
technology in medicine.

Technology in (Medical)
Education
Neil Mehta, MBBS, MS, FACP, is interested in use of technology in
education, social media and networking, practice management and
evidence-based medicine tools, personal information and knowledge
management.

Peter A. Lipson,
MD
Peter A. Lipson, MD, ACP Member, is a practicing internist and
teaching physician in Southeast Michigan. The blog, which has been
around in various forms since 2007, offers musings on the
intersection of science, medicine, and culture.

Why is American Health Care So Expensive?
Janice
Boughton, MD, FACP, practiced internal medicine for 20 years before
adopting a career in hospital and primary care medicine as a locum
tenens physician. She lives in Idaho when not traveling.

World's Best Site
Daniel Ginsberg, MD,
FACP, is an internal medicine physician who has avidly applied
computers to medicine since 1986, when he first wrote medically
oriented computer programs. He is in practice in Tacoma,
Washington.

Other
blogs of note:

American Journal of
Medicine
Also known as the Green Journal, the American Journal of Medicine
publishes original clinical articles of interest to physicians in
internal medicine and its subspecialities, both in academia and
community-based practice.

Interact MD
Michael Benjamin, MD, ACP member, doesn't accept industry money so
he can create an independent, clinician-reviewed space on the
Internet for physicians to report and comment on the medical news
of the day.

PLoS Blog
The Public Library of Science's open access materials include a
blog.

White Coat
Rants
One of the most popular anonymous blogs written by an emergency
room physician.

ACP Internist provides news and information for internists about the practice of medicine and reports on the policies, products and activities of ACP. All published material, which is covered by copyright, represents the views of the contributor and does not reflect the opinion of the American College of Physicians or any other institution unless clearly stated